Brazil's real, not the dollar, could be the solution to Argentina's currency turmoil, an economist says

• Argentina should peg the peso to Brazil's real, not the US dollar, to deal with exchange-rate instability and hyperinflation, an economist said.
• "If Argentina wants a currency peg so badly - Dollarization is after all just a peg - peg to Brazil," Robin Brooks said.

Argentina should peg its currency to Brazil's real, not the US dollar, to deal with its economic problems including rampant exchange-rate instability and hyperinflation, according to an economist.

"If Argentina wants a currency peg so badly - Dollarization is after all just a peg - peg to Brazil. Brazil's a commodity exporter (like Argentina), has big trade surpluses (unlike Argentina) and a very credible central bank (unlike Argentina). Such a peg might work for Argentina," Robin Brooks, chief economist at the Institute of International Finance, said in a Tuesday post on X.

A collapse in the peso's exchange rate has prompted some recent calls for Argentina to adopt the dollar itself as its currency - presidential candidate Javier Milei has urged the South American nation to scrap the peso for the greenback to combat triple-digit inflation.

A plunging peso, which fell 20% against the dollar last week, has exacerbated hyperinflation across Argentina, which runs at 113.4% annually.

Some market experts have also backed the idea of Argentina potentially adopting the US currency – economist Steve Hanke recently called for the nation to mothball its central bank and dollarize.

A move to adopt the greenback as Argentina's main tender would walk back efforts by the country to reduce its reliance on the dollar for trade and investments. Last month, Argentina allowed people to open bank accounts using the Chinese yuan. Then earlier in April, it said it would start buying a chunk of its Chinese imports in yuan instead of dollars.

Brooks' latest comments come after he suggested earlier that Argentina needs a recession to fix its crashing currency, not dollarization.